Authorities won’t put...

The BSP chief stressed that the low inflation outlook, the strong growth and steady jobs data should be the basis for evaluating economic fundamentals. “Each economy faces its own unique challenges and should therefore be deliberately implementing policies that suit its circumstances and needs. The Philippines is doing the correct thing in prioritizing a more investment-led economic growth,” Espenilla said. “Allowing the peso to depreciate gradually to a more appropriate level is fully consistent with that strategy.”

Espenilla has been calming the market by often times commenting that the peso will not do a free fall and as a market-determined exchange rate, they expect the peso to move along with market conditions. Therefore, the peso will “take care of itself.”

The BSP’s exchange rate policy is a freely floating exchange rate system and is dictated by the supply of and demand of foreign exchange and less likely to suffer speculative attacks in the foreign exchange market.

Speculative attacks on currencies occur when there is excessive, large volume of foreign exchange selling in the hope that the central bank will run out of reserves and thus a currency crisis ensue, and speculators with a foreign currency hoard will be able to dictate market price.

As of end-July this year, the central bank has foreign exchange and assets’ reserves amounting $81 billion, it is lower compared to same time last year of $85.5 billion. Economists have assessed that at this level, the country has a sufficient level of US dollar reserves and could be considered as having a comfortable buffer against any financial attacks, whether it’s on currency or assets.